DexCom Stock Near Crucial Support – Buy Signal?
DexCom (DXCM) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($66.81 – $73.85), levels from which it has bounced meaningfully before. In the last 10 years, DexCom stock received buying interest at this level 4 times and subsequently went on to generate 74.1% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 3/30/2020 | 134.3% | 597 |
| 5/26/2022 | 100.2% | 684 |
| 9/11/2024 | 32.5% | 166 |
| 4/15/2025 | 29.3% | 104 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For DXCM Read Buy or Sell DXCM Stock to see how convincing this buy opportunity might be.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Here are some quick data points for DexCom that should help decision:
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- Revenue Growth: 9.3% LTM and 17.3% last 3 year average.
- Cash Generation: Nearly 13.3% free cash flow margin and 16.0% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for DXCM was 9.3%.
- Valuation: DXCM stock trades at a PE multiple of 48.3
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and lower margins
For quick background, DexCom provides continuous glucose monitoring systems, including the next-generation G7 CGM, designed, developed, and commercialized for use in the U.S. and internationally.
| DXCM | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Health Care Equipment | – |
| PE Ratio | 48.3 | 24.0 |
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| LTM* Revenue Growth | 9.3% | 5.3% |
| 3Y Average Annual Revenue Growth | 17.3% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 9.3% | -0.1% |
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| LTM* Operating Margin | 16.0% | 18.7% |
| 3Y Average Operating Margin | 15.8% | 17.8% |
| LTM* Free Cash Flow Margin | 13.3% | 13.3% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, DXCM isn’t immune to big drops. It fell nearly 87% in the Global Financial Crisis and took a 58% hit during the Inflation Shock. The 2018 Correction wiped out about 48%, while the Covid Pandemic brought a 37% dip. Even with solid fundamentals, steep sell-offs happen when markets turn sour. Risk is real, no matter how promising the outlook.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read DXCM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.